Why It’s Important to Come Clean Now on Location Data

Ted Morgan, CEO of Skyhook Wireless, knows a thing or two about location data, having helped introduce the kind of technology that Apple, Google and others are using to improve the location accuracy of their phones. And he said with all the attention on location data and privacy concerns, it’s important for companies to come clean now, rather than face a backlash from users or worse, government intervention.

Morgan generally applauded the announcement by Apple (s aapl) yesterday, explaining why location data was being stored on iPhones. He said the company has been more proactive than others in alerting users when their location is being used and getting permission. But he said the entire industry needs to step up and be more transparent with consumers, showing them how their data is being used and ensuring that it can’t be utilized for tracking. Otherwise, the promise of location-based services could go away if consumers fear the worst.

“No one here is acting maliciously, but when you have location stuff, intent doesn’t matter; if you’re checking phones without notifying and keeping a history, you’re opening up big privacy concerns,” Morgan said. “Everyone has to tighten it up so we don’t scare off users. Once people see this as a device that can be used to track, it can kill off the whole thing. If you people don’t trust it, everything goes away.”

The danger comes not just from consumer backlash but from government intervention, said Morgan. Google (s goog) and Apple have been asked to testify May 10 at a Senate hearing on privacy and mobile phones. Apple’s CEO Steve Jobs said in an interview today that Apple plans on testifying before Congress on the issue and he hoped other companies would be as forthcoming. Morgan said the last thing anyone wants is Washington setting the rules.

This is turning into an important moment for the mobile industry. If Congress can come away satisfied, a lot of money can flow from the opportunities created by good location data. Marketers can reach people with more relevant ads. Mapping companies can offer better traffic data based on real-world conditions. Brands can sort out where to build stores and position advertising to match consumer movement patterns.

“When you have this behavioral data, it’s a goldmine for better targeting and better knowledge,” said Morgan.

Now we’ll have to see if companies like Apple, Google, Microsoft (s msft), Nokia (s nok) along with Skyhook, can manage this goldmine effectively without shutting down its money-making potential prematurely. There’s a lot of temptation to use this data in some sneaky ways or just be sloppy with it. But if everyone steps up, the whole industry could come away winners.